Parag Milk Foods Limited

Consumer Defensive — Packaged Foods · NSE

₹277.00−₹18.90 (−6.39%)

DalalBaazaar Score

66 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity, falling profits.

In simple words: Strong business and financial position, though profits are falling even as sales grow. The direction of profits is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Parag Milk Foods Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Parag Milk Foods Limited processes, manufactures, and sells milk and milk products in India and internationally. The company offers ghee, milk, paneer, sweets, curd, butter, dairy whitener, milk powder, and gulab jamun mix products.

IndustryPackaged Foods

SectorConsumer Defensive

Employees2,073

Annual revenue₹3,762 Cr

How does it make money?

Turns over ₹3,762 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹8 left at the operating level before interest, tax and depreciation. Each of its 2,073 employees supports ₹1.81 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin8.4%

Net margin3.6%

Revenue / employee₹1.81 Cr

Who are its competitors?

The closest listed comparisons in its industry are NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES LTD, TATA CONSUMER PRODUCT LTD, DABUR INDIA LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

NESTLE INDIA LIMITEDP/E 59.8x · ROE 79.9%

BRITANNIA INDUSTRIES LTDP/E 44.1x · ROE 51.0%

TATA CONSUMER PRODUCT LTDP/E 59.3x · ROE 7.5%

DABUR INDIA LTDP/E 34.7x · ROE 17.2%

What is its competitive advantage?Some evidence

ROCE of 15.5% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE15.5%

ROE10.7%

Peer median ROE51.0%

What is the outlook?

2 analysts covering the stock expect revenue to grow about 19.2% and earnings to grow about 32.3% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+19.2%

Est. earnings growth+32.3%

Analysts2

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +32% while net margin moved +92% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+32%

Margin effect+92%

DalalBaazaar Score

66/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.55 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal

Quality vs. Valuation

Company Quality

70/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

70/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

27.4x

3Y Median

27.7x

40 monthly readings · mean 30.5x · range 18.9x–49.0x

Sector Median

51.7x

median of 4 sector peers

🟡Currently trading close to its 3y median of 27.7x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 47% below the peer median of 51.7x.

vs. its own history

Fair

27.7x median over 40 months · -1%

vs. sector peers

Cheap

51.7x median of 4 peers · -47%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

27.4x

P/B

2.75x

EV/EBITDA

12.9x

PEG

0.75

Dividend Yield

0.40%

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 5.8% to 8.4% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on equity is rising
ROE has improved from 6.6% to 10.7%.
Return on capital is rising
ROCE has improved from 9.8% to 15.5%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

1 item require attention · 1 high

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 5.8% to 8.4%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 47% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹40 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 6%✓ 8.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Interest cover stays above 3x✗ 2.9x
How much operating profit can fall before interest stops being comfortably covered.
3Revenue growth stays above 7% a year✓ 9.6% CAGR
Latest reported year was 10.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Free cash flow remains positive✓ ₹40 Cr
Profit that never becomes cash eventually stops being profit.
5Debt / EBITDA stays below 2x✓ 1.9x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.

Investment Checklist

9 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 5 neutral · 1 weak

Market Cap

₹3,463 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

27.4x

Fair

Fairly valued against the generic band

P/B Ratio

2.75x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹10.11

Profitable

Profitable on a per-share basis

ROE

10.7%

Moderate

Moderate capital efficiency

ROCE

15.5%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.48x

Low

Conservative leverage

Revenue Growth (YoY)

10.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-21.0%

Falling

Profits are shrinking

Dividend Yield

0.40%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹40 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹277

P/E (Forward)

17.6x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

5.4%

Average

Average margins

Net Margin

3.3%

Average

Average bottom-line conversion

Current Ratio

1.71

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.55

Defensive

Steadier than the market

52W Range Position

50%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

284.6 / 257.0

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

53.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,854 Cr	₹3,078 Cr	₹3,327 Cr	₹3,762 Cr	+9.6%
EBITDA	₹165 Cr	₹227 Cr	₹332 Cr	₹315 Cr	+24.1%
EBITDA Margin	5.8%	7.4%	10.0%	8.4%	—
PAT (Net Profit)	₹53 Cr	₹91 Cr	₹119 Cr	₹135 Cr	+36.4%
EPS	₹4.96	₹7.47	₹9.51	₹10.57	+28.7%
ROE	6.6%	9.9%	11.6%	10.7%	—
ROCE	9.8%	13.9%	17.1%	15.5%	—
Total Debt	₹606 Cr	₹616 Cr	₹654 Cr	₹607 Cr	+0.1%
Free Cash Flow	-₹243 Cr	₹41 Cr	₹87 Cr	₹40 Cr	—

🟢 Revenue has grown at 9.6% a year over 3 years.

🟢 EBITDA has grown at 24.1% a year over 3 years.

🟢 EBITDA Margin has risen from 5.8% to 8.4% over 3 years (+2.6 pts).

🟢 PAT (Net Profit) has grown at 36.4% a year over 3 years.

🟢 EPS has grown at 28.7% a year over 3 years.

🟢 ROE has risen from 6.6% to 10.7% over 3 years (+4.1 pts).

🟢 ROCE has risen from 9.8% to 15.5% over 3 years (+5.7 pts).

🟡 Total Debt has been broadly flat over 3 years (0.1% a year).

🟢 Free Cash Flow has turned positive, from -₹243 Cr to ₹40 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,281 Cr

Total Liabilities

₹1,022 Cr

Total Debt

₹607 Cr

Cash & Equivalents

₹3 Cr

Operating Cash Flow

₹149 Cr

Capex

-₹109 Cr

Shareholding (proxy)

Institutional Holding

2.4%

Insider Holding

54.7%

Corporate Actions

Dividend Rate

₹1.1

Ex-Dividend Date

22 Sept 2026

Analyst Consensus

Recommendations

2 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹283.5

+2.3% vs CMP

Target Range

₹250 – ₹317

Peer Comparison

Company	P/E	ROE
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%
TATA CONSUMER PRODUCT LTD	59.3x	7.5%
DABUR INDIA LTD	34.7x	17.2%

Recent News

1 mixed5 general

Parag Milk Foods invests ₹100 Cr to quadruple paneer capacity to 80 MT/day

scanx.trade, 18 Oct

Parag Milk Foods Ltd is Rated Hold by MarketsMOJO

MarketsMojo, 18 Oct

Parag Milk Foods (BSE:539889) Stock Forecast & Analyst Predictions

Simply Wall Street, 13 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Is Parag Milk Foods the Best Stock in Its Sector? A Look at the Numbers

Univest, 14 Oct

Compare with

Equitymaster, 17 Oct

Stock to buy today: Parag Milk Foods (₹275) – BUY

BusinessLine, 29 Sept

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟡Business QualityAdequate11.5/20

🟢Financial HealthStrong16.3/20

🟢GrowthStrong16.1/20

🟡ProfitabilityModerate8.5/15

🟡ValuationFair8.1/15

🟡RiskModerate5.2/10

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 6%8.4%
✗Interest cover stays above 3x2.9x
✓Revenue growth stays above 7% a year9.6% CAGR
✓Free cash flow remains positive₹40 Cr
✓Debt / EBITDA stays below 2x1.9x